Confident Romania Spurns Fresh IMF Deal

After months of hesitation over a new financial agreement with international lenders, Romania is preparing to reject a fresh deal with IMF, as the new technocratic government is confident that it can consolidate the country's macroeconomic indicators.

"We don't plan to conclude a new deal with the International Monetary Fund," Dragos Tudorache, head of the Chancellery of the Prime Minister, confirmed.

"But, of course, Romania will continue to have normal relations with the Fund, like any other country member of the organisation," Tudorache added.

Marking the completion of its IMF deals, Romania on Monday made the last interest payment on the 13 billion euro it took from Fund in 2009.

In January, the National Bank, BNR, paid the loan's last capital installment, worth 122 million euro.

Romania obtained the loan in May 2009 in exchange for agreeing to push through austerity measures aimed at taming the deficit.

At the same time, Romania borrowed another 5 billion euro from the European Commission and 2 billion euro from the World Bank.

In exchange for the loan, Romania cut public-sector salaries by 25 per cent and increased VAT from 19 to 24 per cent, which helped it reduce the budget deficit in the short term, but delayed economic recovery, which only started in 2012.

After the first stand-by agreement with international lenders expired in 2011, Romania closed two new agreements, but without taking any more money.

The latest agreement was signed in September 2013, but it has not been reviewed so far, as the international lenders opposed the government's plans to impose fiscal relaxation and increase public-sector pay.

Now, Romania's new technocratic government under Dacian Ciolos -...